Nippon Steel Sees 34% Profit Fall for 2008/9

Nippon Steel, the world's second-biggest steelmaker, posted a 6 percent drop in annual profit on Friday and predicted a bigger-than-expected 34 percent fall for the year to March 2009,as raw material costs soar.

Nippon Steel, the biggest beneficiary of strong worldwide sales at Toyota Motor and other Japanese carmakers, sees 370 billion yen ($3.55 billion) in pretax recurring profit for this business year. That is far less than the consensus estimate of 546.63 billion yen in a poll of 10 analysts by Reuters Estimates.

For the year just ended, Nippon Steel posted a recurring profit of 564.1 billion yen, beating the consensus estimate of 558 billion yen.

Nippon Steel and JFE are looking to increase their steel prices to automakers and other customers by up to 40 percent, but most analysts say steel mills will struggle to fully pass on their higher costs to end users this year.

South Korea's POSCO this month raised its 2008 sales target by 17 percent to reflect record first-quarter sales and higher steel prices, but kept its operating profit target unchanged at 4.8 trillion won.

Shares in Nippon Steel fell 27 percent in January-March, in line with the subindex. Shares in JFE fell 22 percent while POSCO dropped 17 percent.